The beginning of a calendar year is a good time for employers to review their document retention status. All employers should establish and maintain a clear record retention policy identifying the location of records, a reasonable schedule of retention and destruction, and a records administrator.
Documents related to employee recruitment and selection, such as job advertisements, resumes, job inquiries and records of refusal to hire should generally be retained for one year. 29 U.S.C. § 626; 29 C.F.R. § 1627.3 (Age Discrimination in Employment Act). Once an employee is hired, EEOC regulations require employers to keep all personnel or employment records for one year. If an employee is involuntarily terminated, his/her personnel records must be retained for one year from the date of termination. 42 U.S.C. §2000e-8(c); 29 C.F.R. §1602.14 (Title VII of the Civil Rights Act of 1964). Separate personnel files should be maintained for each employee.
Employers must maintain pay and promotion records for a period of three years, and must keep all records that would explain the basis for employee wages for a period of two years. (EEOC Recordkeeping Requirements). Additionally, employers must keep a copy of all employee benefit plans and merit systems while in effect and for at least one year after termination of the plan.
Documents related to employee leaves of absence under the Family Medical Leave Act (FMLA) should be retained for three years. 29 U.S.C. § 2626; 29 C.F.R. § 825.500. Remember to keep medical records confidential and separate from the employee’s personnel file. I-9 Employment Eligibility Verification forms should be retained for three years from the date the record was made or a personnel action was taken, whichever is later. 8 U.S.C. §1324a(b)(3) (Immigration and Nationality Act). I-9 forms should also be stored securely and separately from the employee’s personnel file.
This touches on a few, but not all, federal statutes governing document retention. These are general guidelines only, and exceptions may apply. Once an employer is aware of a potential lawsuit or charge of discrimination, employers cannot destroy records related to the subject matter of the complaint for any reason until complete resolution of the matter has been reached, including any appeals.
Tips for Borrowers Negotiating a Loan
Getting a business loan can be a long and difficult process. The bank wants to see everything, the good and the bad. Here are some tips when working with a bank to get a commercial loan. It all starts with a good term sheet.
- Make Sure You have a Lawyer review the Loan Before You Sign it. It’s understandable that you want to keep costs down, but don’t skip a legal review of the term sheet or letter of intent. Have your lawyer review it before you sign it. Getting counsel involved to review a loan agreement after a term sheet has been signed makes it difficult to renegotiate problematic financial or non-financial terms. An experienced credit finance lawyer will quickly identify terms that may be out of market and help you get them back in line with what works for your business. It’s in your favor to work as much detail into the term sheet (even if it’s a non-enforceable letter of intent) as possible before loan documents are prepared. The term sheet will set the tone for the rest of the loan negotiation, and you need to get it right.
- Know what the reporting requirements are for the loan. Borrowers understandably pay a lot of attention to the basic terms of a loan: interest rate, maturity date, financial covenants and events of default. But there are other important obligations in a loan agreement that are often glossed over by borrowers. For example, the borrower will typically be required to send the bank periodic reports on the borrower’s financial condition. Usually, this includes providing quarterly financials 30-45 days after the end of each quarter and its annual financials 60-90 days after the end of its fiscal year. Asset-based loans often require frequent reporting of outstanding accounts and inventory. Some lenders may ask for monthly (or even weekly) budget reports. The point is, the borrower will have to live with the reporting requirements. Be aware of what the bank wants and don’t be afraid to push back before you sign if the reporting requirements are too onerous. It’s critical to have an experienced credit finance lawyer on your side to let you know if the bank is asking for more than is customary.
- Know what collateral is and if its a part of the loan. If the loan will be secured, the term sheet should clearly describe the extent and types of collateral. For loans secured by personal property (as opposed to real estate loans), it may be as simple as “all assets” or it may be only accounts, inventory and equipment. Most banks will require borrowers to provide “first priority liens” on the collateral, so you need to know whether there are any outstanding liens on the collateral that won’t be paid off with the new loan. The bank will do its own Uniform Commercial Code (UCC) lien search to confirm this, but many headaches can be avoided by clarifying at the term sheet stage exactly what the bank will have as collateral.
Free Consultation with a Utah Business Lawyer
If you are here, you probably have a business law issue you need help with, call Ascent Law for your free business law consultation (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506